Question

Henry Hawkins Industries of Batavia, Ohio, manufactures and sells one product. The company assembled the following projections for its first year of operations: Variable costs per unit: Manufacturing: Direct materials S 20 Direct labor S 16 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: S 2 $450,000 Fixed sel7i gministrative ling and $ 70,000 expenses During its first year of operations Henry Hawkins expects to produce 25,000 units and sell 20,000 units. The budgeted selling price of the company's only product is $66 per unit. Required: (answer eah question independently by referring to the original data): 1. Assuming that Henry Hawkins' projections are accurate, what will be its absorption costing net operating income (loss) in its first year of operations? 2. Henry Hawkins is considering investing in a higher quality raw material that will increase its direct materials cost by $1 per unit. It estimates that the higher quality raw material will increase sales by 1,000 units. What will be the company's revised absorption costing net operating income (loss) if it invests in the higher quality raw material and continues to produce 25,000 units? 3. Henry Hawkins is considering raising its selling price by $1.00 per unit with an expectation that it will lower unit sales by 1,500 units. What will be the company's revised absorption costing net operating income (loss) if it raises its price by $1.00 and continues to produce 25,000 units? 4. Assuming that Henry Hawkins' projections are accurate, what will be its variable costing net operating income (loss) in its first year of operations? 5. Henry Hawkins is considering investing in a higher quality raw material that will increase its direct materials cost by $1 per unit. It estimates that the higher quality raw material will increase sales by 1,000 units. What will be the company's revised variable costing net operating income (loss) if it invests in the higher quality raw material and continues to produce 25,000 units? 6. Henry Hawkins is considering raising its selling price by $1.00 per unit with an expectation that it will lower unit sales by 1,500 units. What will be the company's revised variable costing net operating income (loss) if it raises its price by $1.00 and continues to produce 25,000 units? 7. What is Henry Hawkins' break-even point in unit sales? What is its break-even point in dollar sales? 8. What is the company's projected margin of safety in its first year of operations? XAnswer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 4 Required 5 Required 7 Required 3 Required 6 Required 8 Assuming that Newton's projections are accurate, what will be its absorption costing net operating income (loss) in its first year of operations? $ 1,160,000 Net operating income X X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 4 Required 6 Required 7 Required 1 Required 5 Required 8 Newton is considering investing in a higher quality raw material that will increase its direct materials cost by $1 per unit. It estimates that the higher quality raw material will increase sales by 1,000 units. What will be the company's revised absorption costing net operating income (loss) if it invests in the higher quality raw material and continues to produce 25,000 units? Show lessA Net operating income $ 50,000x XAnswer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 4 Required 8 Required 2 Required 3 Required 5 Required 6 Required 7 Newton is considering investing in a higher quality raw material that will increase its direct materials cost by $1 per unit. It estimates that the higher quality raw material will increase sales by 1,000 units. What will be the company's revised variable costing net operating income (loss) if it invests in the higher quality raw material and continues to produce 25,000 units? Show less 42.000> Net operating Ioss S XAnswer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 2 Required 4 Required 5 Required 6 Required 7 Required 8 Newton is considering raising its selling price by $1.00 per unit with an expectation that it will lower unit sales by 1,500 units. What will be the company's revised variable costing net operating income (loss) if it raises its price by $1.00 and continues to produce 25,000 units? $ 37,000X Net operating loss XAnswer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 3 Required 6 Required 1 Required 2 Required 4 Required 5 Required 7 Required 8 What is Newton's break-even point in unit sales? What is its break-even point in dollar sales? (Do not round your intermediate calculations and round your final answers to the nearest whole number.) Break-even point in unit sales 15,295 Units Break-even point in dollar sales 15,295 X $ XAnswer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 5 Required 8 Required 1 Required 4 Required 6 Required 7 What is the company's projected margin of safety in its first year of operations? (Negative amounts should be indicated by a minus sign. Round your intermediate calculations to the nearest whole number.) Margin of safety 310,530 X

Answer 1

working
	Variable costing	Absorption Costing
Direct Material	$20.00	$20.00
Direct Labor	$16.00	$16.00
Variable overhead	$4.00	$4.00
Fixed overhead		$18.00	(450000/25000)
Product cost	$40.00	$58.00
Absorption costing		Ans 1	ans 2	ans 3
For the month ended Dec 31
Units sold P		20000	21000	18500
Sales (P*66)		1320000	1386000	1202500
Less: Cost of good sold (P*58)		$1,160,000	1239000	1073000
Gross profit		$160,000	$147,000	$129,500
Variable Selling & adm expenses (2*P)		40000	42000	37000
Fixed Selling & adm expenses		70000	70000	70000
Net operating income		$50,000	$35,000	$22,500
ans 2
Variable Costing
For the month ended Dec 31		ans 4	ans 5	ans 6
Produced P		20000	21000	18500
Sales (P*66) 65 for ans 6		1320000	1386000	1202500
Less: Variable Cost of good sold (P*40)		$800,000	$861,000	$740,000
Variable Selling & adm expenses (2*P)		40000	42000	37000
Contribution margin		$480,000	$483,000	$425,500
Fixed manufacturing ovrhead		450000	450000	450000
Fixed Selling & adm expenses		70000	70000	70000
Net operating income		($40,000)	($37,000)	($94,500)
Income under absorption costing
ans 1	$50,000
ans 2	$35,000
ans 3	$22,500
Income under variable cosrting
ans 4	($40,000)
ans 5	($37,000)
ans 6	($94,500)
ans 7
If normal situation is considered
Break even in units
550000/(66-42)	22917
Break even in $
22917*66	1512500
ans 8
MOS
(1320000-1512500)	-192500
If any doubt please comment